OK, what is the news here? Options become worthless all the time (a quick search shows that over 90% of SP500 put options expire worthless) and their value exceeds 1M referenced here by several orders of magnitude. What am I missing?

Ok, so what the fund manager did, is sell his BTC holdings to lock in profits, and buy back severely out-of-the-money (i.e. worthless) options, just in case he was really wrong (i.e. if BTC didn't just go to 25k, but up to and over 50k).

Presumably, his thought process was something like "if I sell now, I make $Xm. If I wait until BTC goes to $36k, I make $2Xm... but I think that's quite unlikely. However, it's possible, and my clients would be really mad at me if BTC skyrockets, goes to $60k, and I chickened out at only $18k. So, what I can do, is buy this option for cheap, forgo the profits between $18k and $50k, but if I'm really wrong, at least I'll cash in if it goes above $50k."

So, hopefully he paid much less ($1m) than the total profit he made ($Y0m)?

Maybe, but that literally makes no sense - there's no BTC price at which the (sell BTC + buy options) trade makes more money than the (keep BTC) trade (unless I miscalculated something, which is also an option).

This is a no-news. Options markets have far larger bets that expire all the time. A good options trader will hedge against upside and downside, so it's possible this trader that is about to lose $1M has actually net profited.

This type of Bloomberg is typical of the 'glass half empty' variant of financial 'stories'. As others have explained not accurate and only discussing a future moment in time at the end of the options cycle'. Bloomberg was also full of 'glass half full' bitcoin articles a few months ago. Their quality seems to be descending, reminds me of what happened to Forbes a few years ago.

This is yet another Bloomberg article that highlights their lack of ability to directly perceive cryptocurrencies. They tend to get them confused with the parasitic financial markets that have sprouted up adjacent because that is their business and what matters to their readers. It's like describing an elephant by observing the behavior of the flies that swarm it's droppings.

Not really, the Bitcoin community was the one that made it a financial instrument once Bitcoin went from being called 'a payment system' to 'a store of value'. The community has repeatedly resisted making transfers faster, cheaper or easier due to various reasons(some valid), leading to various forks and altcoins.

The general Bitcoin community also celebrates every time a Wall Street firm starts trading in bitcoin, saying that's a way of Bitcoin going mainstream and being accepted as a store of value.